Week in Review

To save the planet we’re going to stop burning fossil fuel in our cars. Instead, we’re going to burn food. And what could possibly go wrong with that? I mean, what other uses does food have (see Beef prices set to soar by RANDY SHORE posted 1/31/2012 on The Vancouver Sun)?

Soaring feed prices across North America and drought conditions in the United States are pushing the cost of meat — beef in particular — through the roof….

The commodity price of corn is another factor driving the price of popular meats skyward, say meat producers. The price of corn grown for animal feed has doubled since the summer of 2010, driven in part by rising demand for corn as a source of ethanol fuel…

Increases in the price of corn in response to the U.S. push to use the grain for ethanol production has also affected the price of pork…

“[U.S. energy policy] did motivate producers to grow more corn, but it wasn’t nearly enough to meet the increase in demand,” said Rice. “That increased competition drove up the price of corn and that was a huge hit [to pork producers].”

Rich people will still enjoy their tenderloin. As they always will. High price or not. But we make something else out of beef. Hamburger. The staple of low-income family dining room tables everywhere. Meatloaf. Hamburger Helper. Things I’ve enjoyed as a child. And I’m not ashamed to say that I still enjoy. Cholesterol levels be damned.

So we’re saving the planet (from the man-made global warming bogeyman that was created by big world government ‘scientists’ at the University of East Anglia) by making it harder for poor people to have their protein. Of course, the environmentalists are okay with this. As they don’t much like people to begin with. Especially meat-eating people.

Think about this the next time you go grocery shopping. While you decide what not to buy. So you can afford your beef and pork products. To save the planet from a man-made phenomenon. The man-made fear of global warming.

Politics 101

Representative Government changed Government to Serve the People instead of the Other Way Around

Politics can be confusing. And dirty. Which tends to put most people off. Many only get involved during big elections. And even then voter turnout can be low. In addition to the confusion and dirt there’s a feeling of apathy. Nothing ever changes. And they feel that it really doesn’t matter if they vote or not. So many don’t.

They feel that it doesn’t matter who you send to Washington. Because once there even the honest become corrupt. Republican. Or Democrat. They’re both the same. Rich and powerful. Joining other rich and powerful. In their little games. So this feeling of apathy is understandable.

But politics matter. Because it is and always has been a power struggle. And understanding the essence of this power struggle is important. For throughout time this struggle has been between competing oppressors who wanted to establish minority rule over the masses. So the few could live comfortably at their expense of the many. And it was like this for a long, long time. Until representative government. When government began to serve people. Instead of the other way around.

Third Party Candidates often Rise up from Voter Apathy and Anger

Of the two major political parties, one is for the growth of government. And one is for limiting the growth of government. One is for higher taxes. One is for lower taxes. One is for higher regulation of the free market. And one is for rolling back excessive regulation. One is for transferring wealth from the private sector to the public sector. And one is for leaving wealth where the wealth creators created it. In the private sector. One party serves those within the party (by growing government). And one party serves the people (by limiting government). Disagree? If so I’m guessing you still know which party we’re talking about. Even if you do disagree.

So there is a difference between the two major parties. Sometimes it’s hard to see because of the game of politics. Winning elections. And many believe the way to win elections is by buying votes. And both political parties do this. Spend a lot of taxpayer money on projects for their home district to make their constituents happy. Grateful. And, hopefully, in a ‘return the favor’ frame of mind at election time. But to get pork for your district you often have to let others get pork for their districts. A little you vote for my pork and I’ll vote for your pork. Which puts a lot of people off when it comes to voting. Gives them the feeling that all politicians are the same. And leads to all that apathy. Setting the field for third party candidates.

So what is a third party candidate? They are many things. But one thing they are not is this. Winners. Because they don’t win elections. Third party candidates often rise up from that voter apathy. And anger. Fed up with their party, they split and form a third party. Thinking they know how best to beat the opposition candidate. Because they know what single issue will carry the election. Or so they think. But all they do is help the opposition candidate they so loathe to victory. By splitting the vote against the opposition candidate. Because they don’t think. They feel. And let their passion for a singular issue overcome rational thought.

The Majority of Voters Vote to either Expand or Limit the Role of Government in our Lives

And then you have the fringe ideologies so far out of mainstream thought that they don’t have a snowball’s chance in hell of winning a national election. Such as the Green Party. The Reform Party. The Libertarian Party. The Socialist Party USA. The International Socialist Organization. The Socialist Labor Party of America. The Socialist Workers Party. The Communist Party USA. The People’s Front of Judea. The Judean People’s Front. The Judean Popular People’s Front. And, of course, the Popular Front of Judea. Splitter!

Okay, the Judean stuff is from a scene in the classic movie Monty Python’sLife of Brian. But it illustrates as well as belabors the point. Third party candidates are destined for failure. Because there’re too many of them. And they don’t differentiate themselves enough to make significant numbers of people leave either of the main two parties. At least they haven’t yet. And probably never will. Though, surprisingly, Ross Perot came closer than most to winning a presidential election. But he and his Reform Party soon faded to political oblivion. Which was far less surprising.

You see, the majority of voters don’t base their vote on these fringe, single issues. Or extreme ideologies. Instead they vote to either expand the role of government in our lives. Or vote to limit the role of government in our lives. For more of a nanny state. Or less of a nanny state. For a Democrat. Or a Republican. It’s that easy. And with the large amount of voter apathy and anger that’s enough politics in their lives. Either the Democrat bum if you want more free stuff. Or the Republican bum if you are optimistic but expect to be disappointed later. When you see your limited government candidate expand government, albeit smaller than what the Democrat candidate would have done.

The Obama Jobs Speech was the Same Old Same Old with the Angry turned up to Eleven

The big speech was last night. President Obama‘s Jobs speech. After waiting with bated breath. For him to come back from vacation. On Martha’s Vineyard. Where no one wants for a job. Or anything.

What you thought of it depends on your party affiliation. If you’re a Big Government liberal Democrat that wants to stick it to the rich, I’m sure you liked it. If you were looking for substance, I’m sure you were disappointed. It was just the same old same old. With the angry turned up to eleven.

These men and women grew up with faith in an America where hard work and responsibility paid off. They believed in a country where everyone gets a fair shake and does their fair share — where if you stepped up, did your job, and were loyal to your company, that loyalty would be rewarded with a decent salary and good benefits; maybe a raise once in a while. If you did the right thing, you could make it. Anybody could make it in America.

For decades now, Americans have watched that compact erode. They have seen the decks too often stacked against them. And they know that Washington has not always put their interests first.

Yeah, it used to be like that. Until greed set in. Government greed. Their insatiable want of private sector wealth. And power over our lives. High taxes. And punishing regulations. These have hurt American businesses that once provided those fair shakes. It’s President Obama and his party that have been making this a business unfriendly nation. Giving American businesses an unpleasant choice who struggle to compete. Either close. Or conduct business in a country that lets them compete.

Just look at the effect of Obamacare. All hiring is frozen. And those who can get Obamacare waivers are. The communist Chinese don’t have these problems.

The question is whether, in the face of an ongoing national crisis, we can stop the political circus and actually do something to help the economy.

He says as he scolds the American people. And our Republican representatives. Yelling at us. Scowling at us. Fed up with us. Because he is not getting his way.

Ultimately, our recovery will be driven not by Washington, but by our businesses and our workers.

Absolutely right. And the best thing Washington can to is to stop helping. Their tax and regulatory policies are smothering economic growth. You want to help? Then get out of the way. And let business do what business does best. Grow. And create jobs. To meet demand. That the market is demanding. Not building what the government thinks is best.

I am sending this Congress a plan that you should pass right away. It’s called the American Jobs Act. There should be nothing controversial about this piece of legislation. Everything in here is the kind of proposal that’s been supported by both Democrats and Republicans — including many who sit here tonight. And everything in this bill will be paid for.

That urgent is it? Urgent. But not so urgent to cancel your luxurious vacation on the exclusive Martha’s Vineyard? Where the rich and famous vacation to get away from people like us. You know, if it could wait until after Martha’s Vineyard, it can’t be that important.

Democrats and Republicans support everything in this plan? If so why isn’t this already law? If not important before, why is it now? Some two and a half years into your presidency? And some two and a half years after applying your laser-like focus on job creation?

It will create more jobs for construction workers, more jobs for teachers, more jobs for veterans, and more jobs for long-term unemployed.

Jobs for teachers? There’s nothing stimulative about that. They don’t hire workers. And the kids they teach aren’t going to hire any workers for a very long time. This is just more money for teachers’ unions. Which will be funneled back to the Democrat Party via union dues.

We pay teachers with tax dollars. Paid by the taxpayers. This is money the government transfers from the private sector economy to the public sector teachers. So before teachers can stimulate with this money the private sector has to lose it first. They take a large sum of money from the private sector. And give it to the teachers. Less administration costs to make this all happen. To stimulate the private sector economy. Which means the teachers spend less money than the private sector would have if they were able to keep their money. This is a net loss of economic activity. And is not stimulative.

Teachers are like government. They provide an important service. But they are taxpayer financed. And like anything taxpayer financed, they are a drag on the economy.

More shovel-ready construction projects? You told us yourself there is no such thing as a shovel-ready project. This won’t be stimulative either. Construction projects just don’t happen overnight. Even if you get rid of all the regulatory red tape. Projects take months to engineer. If you cut that short there will be cost overruns to correct all the things missed in the engineering process. Then there’s the asbestos abatement study. Lead abatement. Environmental impact studies. At best these will start hiring in time for the 2012 election campaign. Which no doubt is the goal.

It will provide — it will provide a tax break for companies who hire new workers, and it will cut payroll taxes in half for every working American and every small business. (Applause.) It will provide a jolt to an economy that has stalled, and give companies confidence that if they invest and if they hire, there will be customers for their products and services. You should pass this jobs plan right away. (Applause.)

If tax breaks are good for businesses then just cut tax rates. A tax rate cut is more stimulative than a onetime tax credit. A tax credit does not instill business confidence. Because hiring a new employee is far more costly than any onetime tax credit. Especially with Obamacare bearing down on small businesses. It’s these permanent costs of current tax and regulatory policies. These are what are keeping business skittish about expanding and hiring. And a onetime tax credit won’t change that. A repeal of Obamacare would probably spark some business growth. But not a targeted tax credit.

Pass this jobs bill — pass this jobs bill, and starting tomorrow, small businesses will get a tax cut if they hire new workers or if they raise workers’ wages.

Wishful thinking. Whoever came up with this is an economic simpleton. He might as well have asked everyone to voluntary pay more for their groceries. So the stores will hire more people with all that additional profit. Employees are another cost of doing business. Voluntarily increasing these costs above the market cost will only make these businesses less competitive in the market place. Threatening their business. And all the jobs they currently provide.

It’s not just Democrats who have supported this kind of proposal. Fifty House Republicans have proposed the same payroll tax cut that’s in this plan. You should pass it right away. (Applause.)

Yes, payroll tax cuts are good. They reduce the cost of doing business. And let employees keep more of their earnings. So cutting Social Security and Medicare taxes will help. But this will only set up higher taxes down the road. Because these programs are going broke. Businesses understand this. They know it will only be temporary. And illusionary. For they will pay more in the future. So they aren’t going to hire more now.

Building a world-class transportation system is part of what made us a economic superpower. And now we’re going to sit back and watch China build newer airports and faster railroads? At a time when millions of unemployed construction workers could build them right here in America? (Applause.)

No. It didn’t. We took over the title of economic superpower from the British before the federal highway bill. And private industry built the railroads. And robber barons. Sure, government helped. But it didn’t lead the way.

China? Really? Why is China building so much infrastructure? Because they have cheap labor. They couldn’t do what they’re doing if their labor costs were the same as ours. And that high-speed rail system? They’re now questioning quality and safety.

And there are schools throughout this country that desperately need renovating.

According to my calendar it’s September. And I’m pretty sure it’s September throughout the country. Which means what? That’s right. The kids just went back to school. Which means the next round of school renovation projects will take place starting next June. When the kids get out of school. Not very stimulative if you ask me. Unless you just want a lot of people working on these school renovations during the 2012 election campaign.

And to make sure the money is properly spent, we’re building on reforms we’ve already put in place. No more earmarks. No more boondoggles.

And we’ll set up an independent fund to attract private dollars and issue loans based on two criteria: how badly a construction project is needed and how much good it will do for the economy. (Applause.)

Great. Nothing guarantees to speed things up like making it go through a new government bureaucracy. Which can better send money to friends of the administration. Just like that $800 billion stimulus.

Pass this jobs bill, and companies will get a $4,000 tax credit if they hire anyone who has spent more than six months looking for a job.

Let’s crunch some numbers. Say you hire someone. Pay them $30,000. Your half of Social Security and Medicare taxes come to $2,295 for the year. Now factor in your other costs. State and federal unemployment insurance. Workers’ compensation insurance. Health care. Etc. Not to mention their salary. It adds up to a lot of money. Far more than that $4,000 tax credit. For hiring someone they don’t need to support their current level of business. And you know what? A smart business owner isn’t going to do this.

The plan also extends unemployment insurance for another year. (Applause.) If the millions of unemployed Americans stopped getting this insurance, and stopped using that money for basic necessities, it would be a devastating blow to this economy.

The government has to take that money out of the private sector economy first. Before it can pay unemployment benefits. Someone is still spending that money. Just a different someone. By the time you add in the cost of administering those benefits, there is a net loss in economic activity.

Unemployment benefits help the unemployed while they look for another job. They don’t stimulate the economy.

The agreement we passed in July will cut government spending by about $1 trillion over the next 10 years. It also charges this Congress to come up with an additional $1.5 trillion in savings by Christmas. Tonight, I am asking you to increase that amount so that it covers the full cost of the American Jobs Act. And a week from Monday, I’ll be releasing a more ambitious deficit plan — a plan that will not only cover the cost of this jobs bill, but stabilize our debt in the long run. (Applause.)

Standard and Poor’s wanted to see $4 trillion in real spending cuts. Not cuts in the out-years that will disappear in the next budget deal. Real cuts. If not they said they would downgrade the U.S. sovereign debt rating. They couldn’t do it. The best they could do was a $1 trillion tax cut over the next 10 years. And by golly if S&P didn’t downgrade our credit rating.

And the special commission is to find another half trillion in spending cuts? On top of the $1.5 trillion they were already looking for? That Congress was unable to find? And now they have to find $2 trillion? Yeah, like that’s going to happen. That’s a plan with but one goal. Failure.

With this kind of spending, a deficit reduction plan can only mean one thing. More taxes. Just what the economy needs. Not.

While most people in this country struggle to make ends meet, a few of the most affluent citizens and most profitable corporations enjoy tax breaks and loopholes that nobody else gets. Right now, Warren Buffett pays a lower tax rate than his secretary — an outrage he has asked us to fix. (Laughter.) We need a tax code where everyone gets a fair shake and where everybody pays their fair share.

An executive secretary probably earns something north of $60,000 a year. That puts her in a top marginal tax bracket of 25%. Crunching the numbers and this executive secretary will pay $11,125 in federal taxes. Now let’s assume Warren Buffet has a half billion dollars in investments that pay a return of 8%. That’s a capital gain of about $40 million. Taxed at a paltry 15% capital gains tax that’s a measly $6 million in federal taxes. Funny. His secretary has a higher tax rate. But Buffet pays approximately 53,833% more in tax dollars. I don’t know how you can say one person paying $40 million in taxes isn’t paying his fair share.

Should we keep tax loopholes for oil companies? Or should we use that money to give small business owners a tax credit when they hire new workers? Because we can’t afford to do both. Should we keep tax breaks for millionaires and billionaires? Or should we put teachers back to work so our kids can graduate ready for college and good jobs? (Applause.) Right now, we can’t afford to do both.

This isn’t political grandstanding. This isn’t class warfare. This is simple math. (Laughter.)

This is nothing but political grandstanding and class warfare. And rather Orwellian. In Nineteen Eighty Four, they just changed the meaning of words to control the people. Such as slavery is freedom. But changing the meaning of words doesn’t change what slavery is. It’s still slavery. No matter what you call it. And political grandstanding and class warfare is political grandstanding and class warfare. Even if you say it isn’t.

Now it’s time to clear the way for a series of trade agreements that would make it easier for American companies to sell their products in Panama and Colombia and South Korea -– while also helping the workers whose jobs have been affected by global competition.

America can’t compete with China because Chinese labor is cheaper. So to make American products more competitive the president wants to subsidize our high cost of labor. With American tax dollars. Spread the higher cost of U.S. goods throughout the American economy. Leaving everyone with less money for their own personal needs. So we can keep Big Union working. And supporting the Democrat Party. Which will only increase government spending. Our deficit. And our debt.

To subsidize Big Labor they’ll have to pill that money out of the private sector economy first. So you subtract X from the private sector economy. And give X to Big Union. Less an administration fee, of course. Meaning that there will be a net loss of economic activity.

If we provide the right incentives, the right support — and if we make sure our trading partners play by the rules — we can be the ones to build everything from fuel-efficient cars to advanced biofuels to semiconductors that we sell all around the world.

The free market doesn’t need government incentives and support. They did fine and dandy in the old days without any government help. And making our trading partners play by the rules? If you could do that they would be playing by the rules already. There’s nothing you can do to make China stop undervaluing the yuan. Unless you want to throw up protective tariffs on Chinese goods. Of course they’ll retaliate. Which will only make everything more expensive for the American consumer. Besides, we already tried this. Just before the Great Depression.

Well, I agree that we can’t afford wasteful spending, and I’ll work with you, with Congress, to root it out. And I agree that there are some rules and regulations that do put an unnecessary burden on businesses at a time when they can least afford it. (Applause.) That’s why I ordered a review of all government regulations.

Didn’t Al Gore already reinvent government? To root out wasteful spending and regulations? Yeah, he did. Or tried. Turns out that’s a lot easier said than done. Especially when you don’t really mean it. I mean, come on, the Left lives and dies for these costly regulations. They’re not just going to sit idly by and let them get repealed. Not when they fund Democrat candidates in elections.

But what we can’t do — what I will not do — is let this economic crisis be used as an excuse to wipe out the basic protections that Americans have counted on for decades.

We all remember Abraham Lincoln as the leader who saved our Union. Founder of the Republican Party. But in the middle of a civil war, he was also a leader who looked to the future — a Republican President who mobilized government to build the Transcontinental Railroad — (applause) — launch the National Academy of Sciences, set up the first land grant colleges. (Applause.) And leaders of both parties have followed the example he set.

And the transcontinental railroad? That was Congress, too. And one of the most corrupt Congresses in history. The incentives and support Congress gave encouraged them to build track on ice. Zigzag to cover as much land as possible to claim the mineral rights beneath. And when east and west finally met, they kept building track. Parallel to each other. To keep collecting money for track mileage laid. And the cost overruns made a lot of Congressmen wealthy. No, this railroad was not America’s finest hour.

How many jobs would it have cost us if past Congresses decided not to support the basic research that led to the Internet and the computer chip?

The government Internet (DARPA) was nothing more than file sharing and email for scientists. If private enterprise and entrepreneurs didn’t step in that’s what the Internet would still be.

What kind of country would this be if this chamber had voted down Social Security or Medicare just because it violated some rigid idea about what government could or could not do? (Applause.) How many Americans would have suffered as a result?

Actually they’d probably be a lot better off. As far as a return on investment, Social Security is one of the worst retirement investments out there. Why? Because it’s not an investment. Your money goes into the Social Security trust fund. Where it ‘waits’ for your retirement. But before you do, the government takes that money and spends it. Leaving an IOU in the trust fund. This is no IRA. No 401(k). No mutual fund. It’s not even a savings bond. In fact, if you die before you collect, all that money you paid in is kept by the government. It doesn’t go to your heirs with the rest of your estate. Like an IRA, a 401(k) or a mutual fund would.

But Social Security has been a real success. For the government. Because it has made generations of people dependent on government in their retirement. Who live in fear of losing their benefits. And will do anything to keep those benefits coming. Even if it means screwing their own children. And their grandchildren. They’re so frightened by the Democrats that they will vote Democrat. No matter how much the Democrats steal from future generations.

I don’t pretend that this plan will solve all our problems. It should not be, nor will it be, the last plan of action we propose.

That’s right. You never want a serious crisis to go to waste. And they will milk this for all it’s worth. Stimulus. Bailing out the UAW pension funds (i.e., the auto bailout). Financial reform. Obamacare. Everything they’ve always wanted. But could never get through the normal legislative process.

The Problem with Barack Obama is that he’s a Keynesian who wants to Grow the Government

Once again the professor scolds those who don’t agree with him. And offers more of the same. Which has already failed to reverse the worst recession since the Great Depression. And it’s not going to work this time. How do we know this? Because if this stuff worked it would have worked the first time.

And it would be nice to see the plan before our representatives pass the plan. For as CBO said before, you just can’t score a speech. We need to see the numbers. And the leaps of faith. But I guess it’s hard to quantify soaring rhetoric. Especially when you’re offering the same thing. That you’re trying to make sound different this time.

The problem with Barack Obama is that he’s a Keynesian. With one slight difference. Keynesian stimulus is supposed to be temporary. Whereas Obama’s stimulus gets added into the baseline budget. Making his stimulus spending permanent. His number one goal isn’t growing the economy. It’s growing the government. That’s why his polices don’t help the economy. But they sure have grown the government. And in Obama’s book that’s mission accomplished.

But he sure would like a second term to continue the fun. But I just don’t see that happening. For I can’t see how he can fool that many people into believing that they’re better off after four years of his policies.

Thomas Jefferson hated Alexander Hamilton. For a variety of reasons. He thought he was too cozy with the British. And too anti-French. He also thought Hamilton was too cozy with the merchant class and bankers. Jefferson hated them, too. For he thought honest Americans farmed. Not buy and sell things other people made. Or loaned money.

But Hamilton was not a bad guy. And he was right. George Washington, too. America’s future was tied to the British. Trade within their empire benefited the fledging American economy. And the Royal Navy protected that trade. For they ruled the seas. They couldn’t get that from France. Especially with a France waging war against everyone.

But there was something especially that Jefferson hated Hamilton for. Assumption. And funding. The new nation’s finances were a mess. No one could figure them out. There was pre-war debt. And war debt. State debt. And national debt. The Americans owed their allies. Neutral nations. And the former enemy they just won their independence from. Getting their hands around what they owed was difficult. But important. Because they needed to borrow more. And without getting their finances in order, that wasn’t going to happen.

Thomas Jefferson Understood that a Permanent Debt gave a Government Power

Hamilton was good with numbers. And he put America’s financial house in order. A little too well for Jefferson. The new federal government assumed the states’ debts (assumption). And serviced it (funding). Giving great money and power to the federal government. Far more than Jefferson believed the Constitution granted. And this really stuck in his craw. Because this was the source of all the mischief in the Old World. Money and power. The Old World capitals were both the seats of political power. And the centers of commerce and banking.

Jefferson understood that a permanent debt gave a government a lot of power. Because debt had to be serviced. And you serviced debt with taxes. The bigger the debt the greater the taxes. Which didn’t sit well with this revolutionary. I mean, excessive taxation was the cause for rebellion. Taxes are bad. And lead to political corruption. Because the more taxes the government collects the more it can spend on political favors. Patronage (good paying government jobs for political allies). Giving rise to a politically-connected ruling class. Like the Old World aristocracies. Government grows. As does their control over the private sector economy.

It’s a process that once started moves in only one direction. Greater and greater debts. Paid for by greater and greater taxes. Until the debt becomes unsustainable. Like in Revolutionary France. In present day Greece. And even in the United States. Who, in 2011, saw its sovereign debt rating downgraded for the first time in American history. Because of record deficits. And record debt. Caused by excessive spending. Everything that Jefferson feared would happen. If government had a permanent debt.

Baseline Budgeting guarantees Permanent Growth in Government Spending

Big Government spending took off in America in the Sixties. Historically government receipts averaged 17.8% of GDP. During the Fifties and the Sixties, GDP grew while debt remained flat. Of course, if GDP grew then so did tax dollars coming into Washington. For 17.8% of an expanding GDP produced an expanding pile of cash in the government’s coffers.

Liking the taste of this money, government kept spending. So much so that they adopted baseline budgeting in 1974. Where current spending is automatically added to for next year’s spending. Guaranteeing permanent growth in government spending. To pay for LBJ‘s Great Society. The Vietnam War. Apollo. And other spending programs. The spending was so out of control that the debt started to creep up. And what they didn’t borrow they printed. Leading to the Nixon Shock.

The Nixon Shock (ending the quasi gold standard) unleashed inflation. Which Paul Volcker and Ronald Reagan defeated. With inflation tamed and the Reagan tax cuts, the Eighties saw solid GDP growth. And record deficits. The Democrats liked all that cash coming into Washington. And they spent it faster than it came in. But to reduce the deficit they made a deal. For each dollar in new taxes the Democrats would cut three dollars in spending. Of course they lied. Because Democrats don’t cut taxes. They got their new taxes. But Reagan didn’t get any spending cuts. In fact, the deal went the other way. For every dollar in new taxes there were three dollars in new spending. The deficit grew bigger. And for the first time the debt grew at a greater rate than GDP. As shown here:

After the 1994 midterm elections, Bill Clinton and the new Republican House compromised. They reined in spending. Implemented welfare reform. And rode the dot-com bubble on the good side. Before it burst. It was capital gains galore. Put all of this together and GDP rose and flooded Washington with tax receipts. While debt remained flat. In fact, there were budget surpluses forecast. But then that dot-com bubble burst.

It was an $800 billion stimulus. Something he promised would have no pork or earmarks. Nothing but shovel-ready projects. Of course, it was nothing but pork and earmarks. And those shovel-ready projects? There’s no such thing. So the stimulus didn’t stimulate anything. Other than record deficits (surpassing Bush’s). And record debt. Debt increasing at a greater rate than GDP. And equal to or greater than GDP in dollars. Not seen since World War II.

Hamilton and Jefferson would have United in Opposition against Barack Obama

Debt fell as a percentage of GDP following World War II. It fell from above 90% to below 40% around the end of the Sixties. GDP was rising during this period while debt remained flat. So the flat debt became a smaller and smaller percentage of a growing GDP. The ‘growing your way out of debt’ phenomenon. But that process stopped and reversed itself during the Seventies. When Congress spent with a fury. As noted above. Debt grew. Back to the level of GDP it was during a world war. Only now there is no world war. And we’re not spending to save democracy. We’re spending to end democracy.

It is what Jefferson feared most. Out of control government spending. Racking up massive debt. The kind that is impossible to pay off. And is permanent. And it was being done not for a war to save democracy from fascism. But to change America. To make it a different kind of nation. No longer one of limited government. But Big Government. One with a ruling class. A ruling class that now has a claim on 100% of GDP. To pay for everything they gave us. Where there is no choice but fair-share sacrifice. Where everyone pays their ‘fair share’ of taxes. Which is government-speak for raising taxes on everyone. To flood government coffers with more private sector wealth.

The country is not what it was. And it will never be what it once was again. Not with this level of spending. This is the kind of spending nations see in their decline. It’s what toppled Louis XVI. It’s what roiled Greece in riots. It’s what downgraded U.S. sovereign debt. For the first time. Even Alexander Hamilton wouldn’t approve of this. For his Big Government idea was all about making the nation an economic superpower. Not bringing back feudalism.

So if you’re not a fan of Barack Obama, here’s something you can credit him for. His policies would have reconciled two of our most beloved Founding Fathers. For Hamilton and Jefferson may have hated each other. But they would have united in opposition against Barack Obama.

Government can only Spend what it Taxes away from the Private Sector

What stimulates? Tax cuts? Or tax hikes? Ronald Reagan believed it was tax cuts. But everyone one on the Left poo pooed Reaganomics. ‘Trickle-down’ economics only stimulated rich people, they said. Those on the Left prefer Keynesian stimulus. Tax and spend. To take some of that money the government pulls from the private sector. And spend it to stimulate the private sector.

What did we learn from the great 2011 debt ceiling debate? And the subsequent S&P credit downgrade? This. Government is spending beyond its means. Those on the Left say this is due to insufficient taxation. Those on the Right say we’re spending too much. That’s neither here nor there for our purposes here. I only mention it to emphasize a point. Government can only spend what it taxes away from the private sector.

For the government to stimulate the private sector economy, then, it must first tax money out of the private sector. So let’s take a look at a proposed stimulus plan. Let’s say the government revises the federal withholding tax rates so that there is a net 5% increase in the effective tax rate (tax revenue divided by income). And let’s put these numbers into a chart like this:

Let’s say all numbers are millions of dollars. The effective tax rate changes from 20% to 25%. And tax revenue increases by $25,000. (Effective tax in the above chart.) That’s the additional amount they pulled out of the private sector. That they will use for government stimulus spending. Now the government has to process this. Through a large bureaucracy. Let’s say that these ‘overhead’ costs are 15%. Subtract that from the stimulus amount. And you have $21,230 left. To stimulate the economy.

So they pull $25,000 out of the private sector economy. So they can inject $21,250 back into it. Which means the net stimulus added is a negative $3,750. That’s right. They added money to the economy. After removing a larger amount from it first. And that’s Keynesian stimulus.

Keynesian Spending favors the Politicians, not the Private Sector

This is actually opposite of what a stimulus is supposed to do. Which explains why Keynesian stimulus spending fails. But it’s even worse than this. Because those numbers above are for a best case scenario.

They don’t take into account pork and earmarks that make up most of a stimulus bill. Such as the Obama stimulus bill. Which proved to be more a Democrat wish list of repressed wants for some 40 years than shovel-ready stimulus. And the 15% overhead is something you see in the private sector. Not in a government that pays $300 for a toilet seat. So let’s factor these more realistic numbers in.

The numbers are much worse. By increasing taxes 5% you actually pull 8.63% out of the private sector economy. There is no stimulus. That’s a net deficit. And a lot of pork and earmarks for the politicians. And to make things worse, this additional spending finds its way into baseline budgeting. Which means that they increase the current deficit. And all subsequent deficits.

That doesn’t favor the private sector. That favors the politicians. Which is the goal of Keynesian stimulus spending.

The Beauty of Tax Cuts is that the Money doesn’t go through the Sticky Hands of Government

So we see that Keynesian stimulus favors the politicians over the private sector. Is there another form of stimulus that actually favors the private sector? As it turns out, yes. Tax cuts. Let’s look at cutting taxes instead of raising taxes.

The beauty of tax cuts is that it doesn’t require the money to go through the sticky hands of government. So a tax cut of $25,000 equals a stimulus of $25,000. The money remains in the private sector. And we pull no money out of the private sector. So this is pure stimulus.

The net add to the private sector economy is 6.25%. Which is 14.88% better than the Keynesian approach. (Going from a 8.63% decrease to a 6.25% increase). So it’s clear which way to stimulate is better. It’s a no brainer. So why don’t the diehard Keynesians admit defeat? Simple. Tax cuts don’t go through the sticky hands of government.

The Keynesians will no doubt say this is an oversimplification of stimulus. And it is. But the fundamentals remain the same. Government stimulus spending is funded by the private sector. Either by higher taxes to pay for the stimulus. Or by higher taxes to pay for the cost of borrowing the stimulus. And if the government just prints the money for the stimulus, a depreciated dollar makes everything cost more in the private sector. Whatever they do the private sector will lose in the long run. Because they ultimately pay the bill.

Tax cuts don’t have this affect. Because you don’t have to pay for tax cuts. The money never belonged to the government in the first place. So they don’t have to pay for it. The private sector just gets to keep what is rightfully theirs. But the Keynesians will cry that if you cut taxes you will increase the deficit. Yes, you may. But no more than you would by borrowing money to pay for Keynesian spending. Either way the government is spending beyond its means. The government should cut spending. But if they don’t, they should at least pick the option that will stimulate the economy. The option that grows the economy.

The goal of stimulus is to stimulate economic activity in the private sector. And as the exercises above show, the best way to do that is to leave more money in the private sector. Not less. Tax cuts stimulate the private sector. Unlike Keynesian stimulus. Which only stimulates government.

The Obama Stimulus Bill was mostly Democrat Pork and Earmarks

The American Recovery and Reinvestment Act of 2009 was a huge stimulus bill to create jobs. And put people back to work. It cost about $800 billion. And it didn’t work. Some say it didn’t work because it wasn’t big enough. Others say it didn’t work because it wasn’t stimulus but rather a 40-year Democrat wish list of pet projects. Which the Democrats could finally enact having control of the House, the Senate and the White House for the first time in a long time. And they took control of this bill. As Nancy Pelosi said, “We won the election. We wrote the bill.”

So what’s in the bill? Well, President Obama said it would contain no pork. No earmarks. Just spending that would create ‘or save’ jobs. Like infrastructure projects. Rebuilding America’s roads and bridges. But according to the Wall Street Journal, “Some $30 billion, or less than 5% of the spending in the bill, is for fixing bridges or other highway projects.” They further note that of all the spending in the bill little would actually create jobs. About “12 cents of every $1…even many of these projects aren’t likely to help the economy immediately.”

Take high-speed rail, for example. The Washington Post noted the bill included “$8 billion for high-speed rail projects, for example, including money that could benefit a controversial proposal for a magnetic-levitation rail line between Disneyland, in California, and Las Vegas…” One thing about big rail projects, they don’t stimulate. Building railroads takes a long, long time. The higher the speed, the longer the time. Because high-speed trains have more costly infrastructure. And dedicated track. With no grade crossings. And before you build anything you have to do environmental impact studies. Then survey the entire route. Then, once you have a proposed route, you can begin the engineering. It could be years before any ground is broken.

If any ground is broken. Because currently high-speed rail is all pie in the sky. Only two lines to date operate at a profit. One in Japan (Tokyo to Osaka line). The other in France (Paris to Lyon line). All others require government subsidies in one form or another. Because these are costly to build. And costly to maintain. So this is stimulus that won’t stimulate. But it will set the stage for greater future government spending. Making it more pork than stimulus. Snuck into the bill by the Senate. When the House bill went to the Senate. For their turn to steal from the treasury.

Only Schools with Union Teachers did well in Stimulus Bill

The stimulus bill also included $90 billion for the Department of Education. But language in the bill restricted the use of that money. Quoting from the Wall Street Journal, “the House declares on page 257 that “No recipient . . . shall use such funds to provide financial assistance to students to attend private elementary or secondary schools.””

In other words, only schools with union teachers may use this money. Dues-paying union teachers. And the teachers unions support Democrat candidates. Which makes this not quite stimulus. But politics. Profitable politics at that. As some of this stimulus money will make it back to Democrat coffers thanks to those union dues.

According to Certification Map, education received some $90 billion in stimulus money. And their website breaks down the spending:

$44.5 billion in aid to local school districts to prevent layoffs and cutbacks, with flexibility to use the funds for school modernization and repair (State Equalization Fund)

$15.6 billion to increase Pell Grants from $4,731 to $5,350

$13 billion for low-income public school children

$12.2 billion for IDEA special education

$2.1 billion for Head Start

$2 billion for childcare services

$650 million for educational technology

$300 million for increased teacher salaries

$250 million for states to analyze student performance

$200 million to support working college students

$70 million for the education of homeless children

For a bill not containing any pork or earmarks these look a lot like pork and earmarks. I mean, they sure ain’t ‘shovel-ready let’s rebuild the infrastructure jobs’ like we were led to believe. Sure, they may ‘invest in our future’ so we may ‘win the future’, but it doesn’t create jobs like a stimulus bill is supposed to do.

This isn’t stimulus. These are just Democrat pet projects. Added to the bill in a moment of crisis. To take advantage of the crisis. To get the things they’ve been unable to get during the normal legislative process.

Never let a Serious Crisis go to Waste when Writing a Stimulus Bill

When you look at the bill this is what most of it is. Just a bunch of Democrat pet projects. Passed when they still had control of both houses of Congress and the White House. And a delicious crisis. For as Rahm Emanuel said, “Never let a serious crisis go to waste. What I mean by that is it’s an opportunity to do things you couldn’t do before.”

Sure, they’ve always hidden things in bills before. But rarely does $800 billion of free spending come along. They weren’t going to attach this pork to a bill. This pork was the bill. And it included a little bit of everything. Including green energy. Green Chip Stocks list this spending on their website:

$2.5 billion for energy efficiency and renewable energy research

$1 billion energy efficiency programs including energy-efficient appliances and trucks and buses that run on alternative fuel

Last time I looked ‘research’ was not a ‘shovel ready’ project. Neither are alternative fuel programs. Or federal renovation projects. Or the government granting process. (It takes forever and a day for construction projects to start when there is federal money involved.) And tax credits only help a few people work so they can build things that won’t sell at market prices.

Again, not stimulus. But pork. Earmarks. Despite everything they told us. They weren’t going to create jobs and fix the economy. They were settling their political accounts.

Democrats took Advantage of a Crisis to sneak Pet Projects into Law

This shameless Democrat spending spree (remember what Nancy Pelosi said – “We won the election. We wrote the bill”) helped to push the deficit into record territory. Which caused S&P to downgrade our credit. All because the Democrats took advantage of a crisis to sneak a lot of their pet projects into law.

It just goes to show you that you shouldn’t trust politicians. And, based on the American Recovery and Reinvestment Act of 2009, you should especially not trust Democrats. For they are quite sneaky. And often don’t do as they say. For the stimulus bill wasn’t going to have any pork or earmarks. But in reality about 88% of the bill was nothing but pork and earmarks. Which is a lot more than none.

The Devil is in the Details and the Sneakiness is in the Fine Print

You know what they say. Buyer beware. Because they’re out to get you with their sneaky advertising. Which you need to read closely. Because the devil is in the details. And the sneakiness is in the fine print. That print that no one reads. Like credit cards that send you those checks.

They may offer 0% interest for six months when you write yourself a check for $5,000. Wow. Sounds great. But if you don’t pay that off in that 6 month period look out. Through the miracle of compound interest, that $5,000 debt will grow. And that growing starts the moment you cash that check. Because in the fine print the credit card company notes that after the 6-month period they will begin charging interest at 27.24% APR. Starting on day one of the 6-month period.

People may wonder how credit cards can make any money if they don’t charge interest. Well that’s the secret of the zero-interest offers. They don’t expect you to pay it off within in that 6-month period. And the second that 6-month period ends they book $720.84 of interest income on that $5,000 they loaned you. That’s a short-term loan that yields 14.42%. And there ain’t any 6-month investment out there that can match this yield. But it doesn’t end there. The yields on the credit card loan will continue to grow. If you owe that $5,000 for 1 year, that yield rises to 30.91%. And instead of owing $5,000 you now owe $6,545.59.

A zero-interest offer seems to be good to be true. That’s because they are too good to be true. Which you’ll see when you read the fine print. If you read the fine print.

You have to be Sneaky to get People to Agree to Things that will Hurt Them in the Long Run

Now it’s obvious why they do this. Be sneaky. Because they can make a lot of money by doing this. And the more people that take them up on these zero-interest offers the more money they can make. So they put the things that would sour most people on using these checks in the fine print. In hopes few will read it. And few do.

You see, you have to be sneaky to get people to agree to things that will hurt them in the long run. You just can’t be honest. They can’t tell you that this loan will cost you nothing at 11:59 PM on the last day of the 6-month period. And that it will cost you $720.84 one minute later. Worse, your minimum monthly payment will jump about $125 as they calculate this loan into your payment. And compound interest will make that credit card balance swell like a beached whale to the point that you’ll never be able to pay it off.

You’ll lose sleep as your minimum monthly payments grow. You’ll struggle to get that balance to go down. Of course it never will. And the more those minimum payments grow the less money you have for groceries and gas. So then you’ll start paying less than the minimum due so you can put food on the table and drive to work. Then the collection calls start. It’ll get to the point that your stomach turns every time you hear the phone ring.

So you can see why they put this kind of stuff into the fine print. I mean, if they advertise that they are going to ruin your life, are you going to use one of those checks? Probably not.

The Founding Fathers hated Democracy with a Passion

So you really have to be sneaky and devious to get people to voluntarily destroy their lives. And speaking of politics, politicians are the worst. For a credit card company may try to get as much money from you as possible. But that’s just business. And they don’t swear oaths to protect you.

Thomas Jefferson hated bankers and merchants. Partly because he was forever in debt. But mostly because they can buy themselves favors. And the seller of favors is, of course, government. Jefferson was a well read man. He knew history. And he saw how combining money and government led to bad things. Corruption. Patronage. Privilege. War. Money gave government power to do its worse. And allowed a ruling minority to oppress the people for personal gain. Now even though America was founded on the principle that all men are created equal, Jefferson knew that money could, and would, change that. This is one of the reasons why the nation’s capital was located on a swamp a long, long way from the nation’s financial center. New York.

This is also a reason why the nation is a republic. And not a democracy. We have representative government. Not direct participation. For the Founding Fathers hated democracy with a passion. Why? Because all democracies fail. Once the people learn they can vote themselves whatever they want. That’s why the Founding Fathers put enlightened/educated representatives between the treasury and the people. Who will be rational and logical. And not give in to base desires.

But the Founding Fathers were a special breed. Who came along at just the right time and place. And they created something perfect as far as governments go. But as they passed from memory, the ways of the Old World became hard to resist.

You have to let Others Steal from the Treasury if You want to Steal from the Treasury

As the nation grew so did its tax base. More people meant more tax revenue. First through import tariffs. Then the income tax. And other various taxes. A little bit of tax from a huge population meant a lot of money for politicians to play with. And play they did. With the power to control these vast sums of money, they played God. Just as Jefferson warned. Money and government created a ruling minority. Or a Ruling Class. Much like the Founding Fathers fought so long and hard to end in the New World.

Of course, people won’t willingly support a Ruling Class that oppresses them. So they have to be sneaky. And hide much of what they do from the general public. By burying it deep in pages of legislation. Pork barrel spending we call it. To get a part of the population to support you by promising them free stuff. Then you honor that pledge by attaching a rider to a bill to house and feed orphans, for example. When the final bill gets passed into law not only do we house and feed orphans (which everyone supports), but we also shower select constituencies with federal dollars for their help in getting out the vote during the last election (which only those select constituencies support).

Of course you know how this plays out. If you oppose the excess spending in this bill you hate orphans. And who wants to be labeled an orphan hater? Probably not many. But chances are few will oppose it. Because to get pork you have to give pork. You have to let others steal from the treasury if you want to steal from the treasury. And this is why representatives and senators vote to pass thousand page bills without reading them. They know they’re full of shameless pork barrel spending. But as long as they include their pork they don’t care.

Short-Term Gratification with Long-Term Consequences

Politicians are a lot like those credit card companies. Promising great short-term gratification. With long-term consequences that will be a bitch. They both want our money. The credit card companies want us to go on a spending orgy so they can book fat profits on the interest they charge us. Politicians just want to go on a spending orgy with our money.

So who’s worse? The politicians, of course. They’re supposed to be looking out for us. Besides, when the credit card companies are screwing us, at least we get to enjoy the ride before the crash. Taxpayers don’t. Because their money typically goes to people who don’t pay income taxes. So they don’t get to enjoy the ride. They just suffer the crash.

IN THE TUG of war between Big Government and limited government, the proponents of Big Government like to point to the military as a Big Government success story. Now, the U.S. military has been a success story. But not because of Big Government. Unless you want to call paying $200 for a toilet seat a Big Government success story.

People are not perfect. Anything man does, then, will be imperfect. The same is true of the military. Those doing the fighting are by necessity doing the absolute best thing to guarantee victory. They die otherwise. Those furthest away from combat tend to look more towards personal self-interest. And, typically, the Big Government bureaucrats tend to be the furthest away from combat. They’re never in any personal danger. If they aren’t doing a stellar job, other people suffer and die. They don’t.

The military is big business. Which means big money. Which means big graft. And big kickbacks. Military contracts are replete with pork. It’s not necessarily the military contractors at fault, though. When there is only one customer for your goods and services, you have to play by their rules. Politicians have enormous power when awarding contracts. And if you think pure merit is going to land you a contract on its own, think again.

There’s a reason we’re paying $200 a toilet seat. How else is a contractor going to get the money to pay all those bribes demanded by Washington bureaucrats? High-end call girls don’t come cheap, especially if you want them to do the ‘weird stuff’ (to quote a little Dr. Bob Kelso from the television show Scrubs). Private yachts. Golf resorts. Vacation junkets. Campaign contributions. These things are expensive. And if they are the price of admission, how are you NOT going to pay to play?

SITUATION NORMAL, ALL F*cked Up. That’s a SNAFU. It implies a sense of hope. FUBAR doesn’t. F*cked Up Beyond All Repair (or Recognition). That’s when things pass irreparably past SNAFU. And usually when they do, it’s not the fault of the grunt with a rifle in his hands in the middle of the SNAFU.

These ‘military’ terms represent various degrees of incompetence of the generals/civilians above them that results with placing combat forces in very difficult situations. Or simply what happens in the ‘fog of war’. D-Day was a carefully planned assault on Hitler’s Atlantic Wall. The generals and the politicians made their plans. And when General Eisenhower gave the ‘go’ order, everything rested on the shoulders of the teenagers and young men far down the chain of command who would do the actual fighting.

Air power would soften up the defenses and isolate the coast from the interior, hindering the movement of German reinforcements. Paratroopers and glider troops were to land behind enemy lines and take/hold key bridges and knock out specific gun emplacements. A naval bombardment would further soften up the beach defenses. Then the troops and tanks would hit the beaches. They would open up beach exits to allow following troops and armor to pass through and break out of the beachhead.

Yes, that was the plan. But the best laid schemes of mice and men go often askew (to quote the Scottish poet Robert Burns), don’t they? And so they did. The aerial bombardment fell too far inland. When the paratroopers jumped they scattered in the wind. Few landed on their objective. Once the naval bombardment commenced there was so much smoke on the beach no one could see where their rounds were landing. When the beach assault began, they shifted their fire inland to miss hitting their own men. Which made them miss the Germans, too. Still, of the 5 beaches, 4 went somewhat according to plan on D-Day. One, though, was going from SNAFU to FUBAR pretty darn quick.

Omaha Beach. The ‘softening up’ did little to the guns aimed on that beach. Artillery and machine gun fire swept hellfire across Omaha. It was raining lead and iron. This is the beach at the beginning of the Steven Spielberg movie Saving Private Ryan. The first wave of troops littered the beach with dead and dying. The armor didn’t make it ashore. These teenagers and young men were on their own. And there is only one way to go on a beach. Forward, into the enemy fire.

Close to FUBAR, the generals were considering abandoning the invasion. Of course, they were powerless to do anything at the time other than to call retreat. Nothing they could say or do would change a thing on the beach. They were too far away. They couldn’t see. Or hear. Or feel. But junior officers and noncommissioned officers in the fight could. And, using personal initiative, they took action. Paratroopers gathered into fighting units and moved on their objectives. A destroyer captain, closer to shore due to his shallower draft, could see the troops on the beach had no fire support. He took his ship in closer and ran up and down the shallow waters of the coast, providing some of the only effective fire support during the assault. Junior officers and noncoms gathered shattered men from shattered units and led them inland and opened the beach exits.

OMAHA WAS COSTLY, but we prevailed. Not because of any general or governmental bureaucrat. We prevailed because ordinary men did extraordinary things. Nameless men. Our fathers. Our grandfathers. They did incredible things. Things that we cannot even imagine. And we worry what would happen if circumstance once again puts ordinary people in a position like this again. Could we do what they did? We know a few who can. They’re doing it today. But could we? Could we be as extraordinary as our fathers and grandfathers? As those serving in the military today? No doubt some have their doubts.

How, why, do they do it? For God? Country? Family? Perhaps. Or is there another reason?

And Crispin Crispian shall ne’er go by,

From this day to the ending of the world,

But we in it shall be remembered-

We few, we happy few, we band of brothers;

For he to-day that sheds his blood with me

Shall be my brother

(St. Crispin’s Day Speech from William Shakespeare’s Henry V)

And so it goes in war. Circumstance places ordinary men into extraordinary situations. And they do extraordinary things. And in the heat of battle, most thoughts flee their minds but two. Survival. And their brothers. Alongside them in battle. Who are as frightened as they. Who are facing the same enemy fire as they are. Terrified. But standing fast. He will not leave his brother just as his brother will not leave him. This is courage. And this is why American soldiers win battles. This is what makes them give that last ounce of effort. To go above and beyond the call of duty even. To do the extraordinary.

SO THERE YOU have it. The two parts that make up the military. The military part. And the Big Government part. And the two parts couldn’t be more different.

Big Government doesn’t make the military successful. Kids barely out of high school do. And we must never forget that. We need to honor them on Memorial Day. On Veterans Day. And every other day of the calendar. And we should never insult them by saying their actions are the result of a bloated governmental bureaucracy. For nothing could be further from the truth. Ironically, it’s their selfless service that enables that corrupt bureaucracy to become bloated in largess; a secured nation makes a safe place to turn public office into personal gain.

And Big Government will continue to buy their $200 toilet seats. Because that’s who they are. And, unless you’re part of Big Government, you don’t like it. On principle. And for the fact that if you have ever sat on one of those toilet seats, you know there just ain’t anything special about them.